PURA reversal is win for Yale, other major facilities

BY Matt Pilon

Yale's website
Yale's website
Yale's central power plant
Yale University has successfully appealed a state regulator's 2015 decision to deny it natural gas incentives for a combined-heat-and-power plant on its New Haven campus.

On Wednesday, the Public Utilities Regulatory Authority (PURA) issued a final decision ruling that Yale's combined-heat-and-power (CHP) plant qualifies for the incentives after all.

The legislature created the incentives in 2006 to spur development of distributed generation by making it more economical. The benefits of such generation include reduced emissions and load on the grid.

The incentives for Yale include a rebate of certain gas distribution charges from United Illuminating (now called Avangrid) and a demand ratchet waiver, which exempts distributed-generation power generators that have resources available during peak demand times from paying higher back-up power electric distribution rates.

The value of the incentives for Yale were not disclosed.

Of the 191 megawatts of combined heat and power distributed generation operating around the state, 91 megawatts have been built since the incentives were created, according to PURA.

But the remaining older plants are nearing the end of their useful lives and may not choose to replace the assets when the time comes, without incentives in place. That could mean they instead draw power from the grid.

In its original decision last year, PURA had sided with United Illuminating (now Avangrid), which argued that Yale's plant shouldn't receive incentives because it was replacing an existing 18.3-megawatt plant with a smaller 15.8-megawatt plant, which would increase demand on the grid and not provide a benefit to customers.

PURA changed its thinking on that point in its decision this week.

"Even though Yale's replacement DG project has a slightly lower nameplate rating than the retired unit, the authority finds that the replacement project adds capacity because the logical point of reference would be zero capacity since, if Yale chose not to replace the retired facility, Yale would produce zero electricity at the old facility site."

Going forward, PURA said owners of existing distribution generation plants built prior to 2006 who replace that capacity, even partially, will be eligible for the incentives as long as the developer incurs "substantial capital costs" associated with installing the new equipment.

That's good news for a number of companies with older plants, including Pratt & Whitney, which is considering replacing its 29-megawatt cogeneration plant. Facilities Manager Mark Kopera told PURA last year that the incentives are significant factors in choosing whether or not to build a plant.

PURA reopened the Yale decision earlier this year after Yale appealed, arguing that PURA's original denial conflicted with a recent decision allowing incentives for a replacement plant in Norwalk. The school also argued that the pending closure of a 685-megawatt nuclear plant in Massachusetts - announced months after the original PURA denial - had increased the need for distributed generation in New England.

In its ruling, PURA wrote that it agreed with the precedent argument and also said that allowing Yale's replacement plant to have the incentives fits with the legislature's intent in 2006 to promote development of distributed generation capacity.

The new ruling also fits with the legislature's instructions for PURA to be guided by the state's Comprehensive Energy Strategy and other key energy plans, the agency said.